MedPAC Supports SGR Pay Formula Repeal

The Medicare Payment Advisory Commission (MedPAC) has officially endorsed the repeal of the sustainable growth rate (SGR) formula, which determines physician payments from Medicare, in hopes of replacing it with a 10-year fixed rate for primary care physicians and cuts in payments to specialists.

The proposal was originally presented by the MedPAC staff at the commission’s meeting in September. Payments to primary care physicians would freeze for 10 years; specialist payments would be reduced by 5.9% per year for 3 years and then frozen.

The SGR formula connects physician reimbursement rates to increases in the gross domestic product (GDP). Since spending on physician services has outpaced increases in the GDP, the SGR formula required cuts to be made in reimbursements each year over the past decade. However, Congress has always postponed those cuts.

Come January 1, an SGR-triggered pay cut of 30% in physician reimbursement is scheduled—a price too high to sustain physician participation in Medicare, particularly primary care providers. As a result, cuts were recommended only for specialty providers, while freezing reimbursement rates for primary care physicians.

The endorsed plan to repeal the SGR formula will cost around $200 billion; MedPAC has developed strategies to pay for it. The proposal will reach Congress later in October. If Congress doesn’t act on the plan or develop an alternative before the first of the year, a 30% cut in Medicare payments mandated by the SGR will be implemented across the board for all providers.

Physician’s Weekly wants to know…

Do you think the repeal fixes the crisis — or only creates a new one?

Will this have an effect on the already growing rift between primary care providers and specialists?

1 Comment

John Erdman on October 12, 2011 at 3:55 pm

As an ENT specialist the 6% cut for three years will trigger the same response as the 30% cut in one year. I will no longer give medicare pt.s appointments. They will be given a time to arrive at the office and then worked in as I can between patients with commercial insurance. Other specialists I have talked to will just no longer see medicare patients. These cuts will result in medicare patients having the same difficulty in obtaining specialty care that many medicaid patients have now.

My overhead including staff equipment purchase and maintenance is as high if not higher than my PCP friends. correction Cuts like this are unreasonable. That 6% cut is in addition to all the added expenses regarding EMR and E prescribe. If there was some reasonable effort to reduce expenses such as tort reform that may make some of this more palatable.

The government appears to be continuing in its strategy of divide and conquer.